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Global financial markets began to unravel
- Not long after Alan Greenspan stepped down as Federal Reserve chairman in 2006, global financial markets began to unravel. The collapse of a few financial institutions, the near-collapse of many others, a massive bailout by multiple governments, and the worst economic downturn in three-quarters of a century ensued.
hbr.org/2014/01/what-alan-greenspan-has-learned-since-2008
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Jan 10, 2024 · Former Federal Reserve Chair Alan Greenspan’s tenure is often remembered in a few different lights. On one hand, he was known for an almost mystical approach to steering the Fed and was lauded...
Jan 5, 2017 · MORE than ten years have elapsed since Alan Greenspan stepped down from the Federal Reserve; a decade that has not been kind to his reputation.
In autumn 2001, as a decisive reaction to the September 11 attacks and various corporate scandals which undermined the economy, the Greenspan-led Federal Reserve initiated a series of interest cuts that brought down the federal funds rate to 1% in 2004.
- Nixon Price Controls
- Greenspan on Bank Capital
- Greenspan on Bailouts
- Social Security Reform
- Leadership
- The Media
- Political Fights
- Modern Finance
- Timid Greenspan
“Greenspan might easily have ducked this fight with the president. In denouncing Nixon’s price controls, he was attacking the central plank of the administration’s economic policy—and he had intimate knowledge of how the White House dealt with its critics. Moreover, some of his natural allies hesitated to take his side, especially when prices remai...
After leaving office, Greenspan presented a paper at Brookings. In that paper, Greenspan emphasized the importance of capital and offered some calculations as to how much capital is appropriate for banks. Greenspan begins by saying, “The central theme of this paper is that in the years leading up to the crisis, financial intermediation tried to fun...
While Chairman of the Council of Economic Advisers, in 1975 Greenspan opposed a bailout of New York City, which was in dire financial condition. Mallaby claims that, “A dozen years after New York’s rescue, Greenspan himself would join the bandwagon” (p. 200). Mallaby continues in footnote 83 to say, “But history shows that bailouts will be forever ...
According to Mallaby, “Greenspan ducked the challenge of using the Social Security commission to reform government pensions, even though, from the perspective of a libertarian, his appointment represented a golden opportunity to offer more than tweaks and patches” (p. 676). President Reagan established the Social Security Commission in December 198...
“The recovery from the 1987 crash owed less to him than to a cast of lesser-known players…” (p. 676). Mallaby proceeds to name several people who played important roles in handling the crash. Instead of “owed less to him,” the correct view is that Greenspan’s leadership skills allowed him to mobilize key players who managed the crisis created by th...
“… Greenspan went to extraordinary lengths to cultivate the media…” (p. 677). The media are an important conduit between policymakers and the outside world. I have never understood why politicians attack the media. For fleeting political gain, the attacks create long-term enemies. Mallaby’s tone on this issue seems unnecessarily negative to me.
“Greenspan knew he could survive in Washington only by avoiding fights, or by engaging them passively and deviously” (pp. 677–678). Seems correct to me. It also seems to me to be very sensible not to pick fights you believe you cannot win. “He wanted to make friends, not alienate them” (p. 679). Seems like a good idea to me.
“First, he made a pragmatic judgment that megabanks, derivatives, and securitization might be stabilizing, seeing in them risk-spreading advantages as well as evident pitfalls—and even if this judgment ultimately proved wrong….” (p. 679). Mallaby never actually argues the case that securitization and derivatives had much to do with the crisis. The ...
“Quite how harshly Greenspan should be judged for this timidity… (p. 679). “… by the time Greenspan became Fed chairman, his ideology was mostly gone: he was ‘a get along, go along, comfortable and increasingly popular’ figure…” (p. 678). However, consider that President Clinton, in his State of The Union Address, January 19, 1999, proposed that th...
- William Poole
- gswpoole@sprintmail.com
- 2017
Feb 1, 2006 · After a reign of more than 18 years, Alan Greenspan stepped down as chairman of the Federal Reserve yesterday, pushing through a valedictory 25-basis-point increase in its key short-term...
Jan 27, 2006 · As Fed chief Alan Greenspan prepares to step down Tuesday after an eventful 18-plus years, it seems more than a little ironic that one of his lasting legacies will be a central bank that...
